Under most circumstances, a vehicle recall action means a notice in the mail, an irritated customer spending the day at a dealership, and a return to the road. In the case of the Volkswagen pollution scandal, however, the day at the dealership may now be spent selling your car back to the manufacturer.
Last week, Volkswagen agreed to settlement terms that included not only the responsibility of fixing customer vehicles with emissions defeat systems, but also to buy vehicles back from customers that no longer wish to own Volkswagens.
Kelley Blue Book, the definitive voice in used car pricing, estimates the cost of the buyback move at $7 billion.
Volkswagen’s problems began late last year when researchers discovered that VW vehicles were using hardware-based methods, as well as software, to defeat emissions system testing. The vehicles would detect circumstances indicating that they might be undergoing testing and bring emissions down to acceptable levels. Under normal driving circumstances, however, diesel-powered Volkswagens were regularly polluting at levels some 40 times the amount allowed by environmental regulations.
The company’s first move once the scandal broke was to offer affected customers a $500 payout.
As the news got worse and confidence in the brand plummeted, VW began setting aside more and more money to deal with the fallout. Lawsuit after lawsuit was filed; some by customers and some by governments, and it quickly became clear that the financial ramifications of the emissions discovery had just begun.
Last week’s settlement does not shield Volkswagen from further legal action and only covers one particular aspect of the American settlement of the issue. As a global automobile manufacturer, VW still has to deal with Europe and Asia; both of which are likely to be closely following American developments in the case.
All of this while the U.S. Justice Department is also exploring criminal action against Volkswagen and its leadership.
Billions of dollars have been wiped from the company’s stock value and billions more must still be paid to customers who will either opt to sell their vehic